CMS Issues Final Medicaid RAC Rule - September 27, 2011

On Sept. 14, The Centers for Medicare & Medicaid Services (CMS) issued a final rule requiring state Medicaid agencies to implement a Recovery Audit Contractor (RAC) program by Jan. 1, 2012. The Affordable Care Act requires states to contract with RACs to audit payments to Medicaid providers. The final rule includes several provisions that address concerns raised by NAPH in its Medicaid RAC comment letter. Most importantly, the final rule now requires RACs to notify providers of overpayment findings within 60 calendar days, limits RAC reviews to claims filed within the last 3 years and specifies that claims should not be reviewed twice. CMS also will now allow states to elect to exclude managed care payments and payments in connection with payment or delivery reform initiatives. In addition, the final rule specifically states that RACs must return contingency fees associated with reversed determinations after appeals and requires that states incentivize the detection of underpayments and notify providers of any underpayments identified. For more information, please contact Xiaoyi Huang at xhuang@naph.org.